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New Methodology approved for determining initial auction sale price of special permit for subsoil use

On 23 September 2020, the Cabinet of Ministers of Ukraine passed its Resolution No.915 approving a new methodology for determining an initial auction sale price of a special permit for subsoil use (hereinafter - the "Methodology").

The Methodology has been developed by the State Service of Geology and Subsoil of Ukraine (hereinafter – the "SGSU"), which previously launched an integrated centre for calculation and payment of the special permit fee. The centre enabled easier and shorter procedures for granting special permits for subsoil use and created more favourable conditions for potential investors.

As part of reforming the activities of the SGSU, the adoption of the Methodology introduces a transparent and understandable mechanism for determining an initial auction sale price of a special permit and clear calculation of an amount of the fee in cases of granting special permits without an auction.

According to the new Methodology, the calculation formula is based on objective indicators of a value of mineral reserves and resources of a field or subsoil block calculated.

The previous methodology, as approved by Resolution No. 1374 of the Cabinet of Ministers of Ukraine, dated 15 October 2004, was based on estimated indicators, including operating costs of a company, its annual profit, etc.

According to the Methodology, source information necessary for determining an initial price of a permit includes the results of previously conducted geological and economic evaluations (GE-1, GEE-2, and GEE-3), protocols approving mineral reserves based on the results of a state expert examination and appraisal of mineral reserves, state balance reports of mineral reserves, data about comparable sites, materials provided by the State Fiscal Service, etc. 

For further information, please contact Asters' partner Yaroslav Petrov or Senior Associate Marta Halabala.

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